tv Closing Bell CNBC December 6, 2013 3:00pm-5:01pm EST
>> what have you got coming up tonight? >> we'll talk to wall street journal's jon hilsenrath, is there december taper on the table? that's coming up. >> thanks. melissa, thanks. great being with you all week. it's been a long time. fantastic work. appreciate it. thanks for watching, everybody. >> "closing bell" is up next. hello and welcome to the "closing bell." we made it to friday. i'm kelly evans here at the new york stock exchange where things look good in terms of breaking a five-session losing streak we came into today. >> we're almost positive for the week on the s&p. just with this rally today. >> we're watching decimal points, bill. 18005.81. that's what would make us positive for the week. it would be the ninth positive week in a row for the s&p 500, which is the longest winning streak -- or first time we've had such a winning streak in almost ten years since january 2004. >> she's a bigger market nerd than i am. i love that.
>> we have a team of people at headquarters helping us out. 18,005.81. >> dow back to 16,000, thanks to that jobs report this morning. that sent the stock market soaring, 205,000 jobs net-net created and interest rate goes back to five-year low at 7 %. we'll talk about all of that coming up. >> we'll get reaction to all of this from the chief financial officer of deloit, frank friedman. he'll give us a view on the ground of what's really happening and when the fed will ease up on the gas plgdz and what it means. >> do you know how many people deloitte hires every year? 18,000 to 20,000 every year. is that unbelievable? >> we should have a good sense of what they're looking for and what job conditions are like. >> remember last summer, domino's pizza floated the idea of drone delivery for pizza. they even did a video. it was sloughed off as a publicity stunt.
it was actually this time around when jeff bezos at amazon did the very same thing this is week on "60 minutes" that was taken seriously 100%. so why the different treatment, i wonder? domino's versus amazon. we have domino's ceo patrick doyle coming up exclusively and he is ticked off. >> that will be a fascinating discussion. take one more look at markets here as we head into the final hour of trading session. a couple of levels we're keeping an eye on. the dow just over that 16,000 mark. up 1.16%. the strongest gain in about a month. possibly the strongest gain in a couple months. strong numbers across the board for the s&p and nasdaq as well. >> let's talk about it. big market day here as we close out the week. the dow teetering above 16,000. the s&p back above 1800. the nasdaq comfortably above 4,000. let's bring in our market pros for "closing bell" exchange. abigail doolittle, robert luna,
and kenny pocari, and rick santelli. ken kenny, what's this message? >> clearly a relief rally, right? they essentially pushed the taper until well into next year, march anyway. the market is no longer really concerned about it at all. the idea -- >> -- >> you think we -- >> december is not happening at all and i think the market is celebrating that. it likes the jobs are getting stronger but not strong enough to force the december taper, which is why i think you're absolutely seeing this rally today. >> i wonder whether you agree with him, abigail. is this about the timing of the taper or after we saw that report this morning, maybe people getting optimistic about 2014 generally. >> i think, kelly, we're going to see investors starting to be a little nervous about 2014 as they go into the end of this year. maybe lighten up, take profits. if we think about early 2014,
there are three events coming up. first, we have earning season. what will the event of the government shutdown about on those numbers and the outlook? second, we have a changing of the guard at the fed from bernanke to yellen. that could cause volatility. most importantly, third, we have death con match, i don't know, 25 around the debt ceiling debate down in d.c. in february. i think that's the one thing in the past that has stopped this fed rally back in 2011. i think when you look at the combination of nothose factors, yes, today we might have a relief rally. when investors consider those factors, they might want to trim going into the next year. >> let's go to rick santelli. i want to talk about the response on the long end of the yield curve. 288 right now on the ten-year. i think we did hit 290 today. do you think they're putting off a tapering or embracing it sooner rather than later? >> no, you know, i think the treasury market -- i can't try to explain stocks, but in the treasury market, let's look at the facts. earlier today, knee-jerk
reaction, we trade the 293 in the tens. high water mark since 1.83 low yield historic mark is 2.99. even as we sit here at 2.88, we're only 11 basis points away from the high yield close since the low yields. what does that mean? i think the treasury market is still looking at the idea that the fed's going to have to taper. if not, the long end's going to keep pricing it in. maybe more importantly, i think the reason we didn't see 3% today is because there's been a lot of buybacks this week. there was a big one today. and all the big bond funds and all the big investors have these steepeners on. they unwound some on the number, which meant they were selling 5s and buying 10s. that was the shock absorber. i still think we're on track to see better jobs, mostly better data. certainly not crisis data, and hire rates. >> robert luna, when kobe bryant and whoever these athlete super clients come to you and say, what are you dwoog my money in
2014, what are you telling them? >> right now we're looking at some of the things that haven't participated in this rally. and we're looking to go against consensus. some of the things we're looking at are stocks like john deere. a stock that just issued $8 billion buyback, only a $32 billion company. it's been shunned all year long. it's actually down 2% year to date. we're moving into some underperformers. one thing we're looking at is emerging markets and foreign markets who haven't participated for the last year, year and a half. i think the pessimism surrounding them is unwarranted. so, we're looking to go to some of those underperformers right now. >> all right. going to try to play catch-up. rich peterson, you're the numbers guy as well. put this in perspective after this -- almost a four-day -- five-day decline. we started the month out pretty rough on what is traditionally a pretty strong month for the stock market and now today's rally. what do you make of this? >> as led zeppelin said, the song remains the same. what we're seeing is that it's
still a positive outlook for equities. why is that? three of the last four months for nonfarm payroll over 200,000. we're still seeing a combination by the fed. even though tapering may come in early 2014 as we expect, tapering is not tightening. tapering is not a zero sum game. they may go from $85 billion a month to maybe $75. but we'll still have low interest rates. i think the markets will be adjusting to a 3% ten-year sometime in the first half of 2014. the movement high with earnings, we're seeing expectations for $124 earnings per share on the s&p 500. at 15 plus times multiple. you're looking at 1850 or so target for next year. all in all, looks good. but, you know, there are some red flags. >> why isn't a 3% ten-year crimping the style of the stock market. why isn't that bad news for stocks? >> i think it's going to become bad news for stocks but i think it's going to be later reaction, right? i think people are euphoric today because like abigail said,
there are two or three headwinds in front of us. the fed knows that. the market is now comfortable with the fact the fed's not going to change policy in front of those headwinds, right? in front of the fact that jobs, even though they're going in the right direction, they're not going there fast enough. still some underlying weakness in the market. now people know that. i think once we get to 3% on the ten-years, then i think it will be a little problem for the economy, unless they can prove that the economy has strengthened enough to handle it. i don't think it's there yet. >> we've had one small preview of this move and it was called this summer. we saw the ten-year move back up to 3%. we know it took some momentum out of the housing market. if i'm the fed and looking at what's happening with housing, with autos, is the evidence strong enough that that did enough damage that the same will happen again? >> i think they're worried about that. i think they're absolutely worried about that, which is why they're not -- why they're not going to taper. especially why not they're going to taper into the end of the year. right? there are two many other issues in front of them. as abigail said, the changing of the fed, debt ceiling in front
of us. today there's that rumor we'll come to this budget agreement before washington goes on vacation in two weeks. if that happens, that just opens the way further, i think, for a little morally. >> you sound like you're taking some profits here, abigail. are you? >> yes. i think it -- i think that smart investors at this point want to take some off at this point. too many uncertainties. if we look at the russell 2000 over the last two months, it's up nearly 50%. what investor is not going to take some off the table considering we have this d.c. debacle in just another month and a half? it just makes sense to take some off the table, trim a little. it doesn't mean we'll have a significant correction, although i do think that that is ahead at some point. the disconnection between fed-fueled rally over the last five years and sub 2% economic growth connects at some point. i think it's going to create, you know, an ugly bubble. >> robert lun nashgs you mentioned you want to rotate into underperforming markets, like emerging markets, for
example. it's hard to see a scenario where they do well if what abe gale is talking about -- maybe the u.s. market loses momentum -- >> especially if they start tapering. >> i think the argument there, kelly, that's pretty much consensus. everybody out there is saying as interest rates rise, emerging markets will get hurt. that's not necessarily true. a lot of these emerging markets are down 25, 30%. the question is, like today's rally in the market, has that already been priced in? you know, consensus was today, if we had a print in the market of over 200,000 jobs that the market was going to sell off. things moved in anticipation of that. the idea is if rates start to go up, that means our economy is going better and the emerging markets could actually start exporting more to the u.s. i don't think -- >> guys -- >> what, rick? >> everybody's talking about a debacle. you know, i remember when all the politicians were on tv, especially the president saying, oh, my god, if we shut down, it's the end of the world, the end of the world.
we're using this word debacle. i don't know. didn't see it really show up in the data. i don't think it was a debacle. and i think the markets understand, you can call it a debacle, scream the sky is falling but it seems to work out in the end. i don't see those headwinds. >> rick, you're right. in fact f you look at the month of october, which included almost an unprecedented government shutdown, relatively narrow subset of workers, but still the question what the multiplying impact of that would be. october turns out to be one of the strongest months that we've seen. >> i rest my case. thank you, kel. >> as far as the budget agreement, i think that's an under-reported story right now. even if it is sort of a watered down two-year agreement. it means we don't get the angst out of d.c. we've had to deal with. >> exactly. >> couldn't that be part of the rally today as well? >> i think that is part of that. i think that whole rumor, that discussion, is also part of what's also part of lifteding the market today. >> all right. thank you, all. have a good weekend. >> thanks, guys.
>> thanks for your thoughts today. heading to the close, 50 minutes left in the trading session. the dow was up 200 points at the peak. we're off that. we're sitting right on 16,000. something to keep an eye on as we head to the close. again, the last hour is going to be very telling today. >> and a couple points on the s&p will make the difference between a record-breaking week and string of weeks or not. or the first down week in almost ten. that strong jobs report has spurred today's market. up next, cfo of accounting giant deloitte. >> another championship rematch -- why am i talking like this -- between our two market brugsers, seema mody and dominic chu. they will duke it out on whether or not the market is too expensive or too cheap. that's coming up. and after the bell, domino's pizza has seen more expansion than any fast food company globally in the last five years. could its next move, though, be into the air?
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pretty much nothing but green across the major indexes today. >> who's benefitted most from today's rally, you ask? let's go to dominic chu for the big movers. >> looks like i wore the right color tie today. let's start off with one stock in the green, intuitive surgical. we want to clarify something from an earlier market flash. we said there was a recall for davinci surgical robots but it was a recall on a portion of the system, specifically the robotic arm. they say 70% of the affected parts have been inspected and patient safety is not an issue. google is up about 50% year to date. a huge move for google. also intel to the plus side. citigroup is upgrading the chip maker to a buy from neutral rating. pointing to stabilization and corporate demand for personal computers. then phillips 66 gaining ground on news it was announcing a new
$2 billion stock buyback program. we'll end with the gap, which is actually falling. despite reporting a 2% increase in same store sales for november, investors are concerned that recent gains may soon slow. again, kelly, bill, gap, good story but still a downside stock today. back over to you. >> thanks very much. >> today's jobs reported lit a fire under the stock market after it was in a five-day slide. is it enough to light a fire in corporations and economy confidence? >> deloitte thinks business confidence is lacking, which we'll talk about it. but joining us to talk about what his company is seeing in the jobs market and overall economy, die loeloitte chief financial officer. >> you are expected to hire 18,000 people. i ask you if that's normal? >> it's been normal the last couple, three years. i think it's the new normal for us. i think it's going to be every bit 18,000 and maybe moving up
to 19,000, 20,000, if business continues to be robust. with the numbers today, you know, pretty positive. >> that's amazing. >> that's astounding. >> what does it for your turnover? are you largely replacing employees who leave or you were laying off? >> no, we're growing. we're up net 10% this year already. every business has turnover. we have turnover. it does imply, if the economy gets better and jobs become more available, there will be some tick and turnover, i expect, but by and large our turnover has never been better, actually. it's as low as it's ever been. >> wow. okay. is this government work? i mean, what -- >> where are you seeing growth that's going to lyle you to hire that many people right now? >> we have two businesses. one is the attest audit trust business, dealing with the markets, dealing with public. the other is consulting solutions. it's mostly -- it's a little skewed toward consulting, for sure, in technology, strategy, in operations and in human capital. and the other side of the
businesses, we're hiring in audit and tax space as well. >> wow. obviously, this is going to continue to be a source of growth. the complexity today for any company. they almost have to have someone who's a specialist to deal with these kind of operations. i wonder, for the people you're hiring, we hear sometimes about this bifurcation of the labor market. do you find there's a surplus of workers? >> i hear for years we'll have trouble finding people and for years we're still hiring people. i think people have learned that noting and consulting are good professions. they go to school, even in the job reports it's amazing the differential in employment if you have a college degree versus not a college degree. so, they know there's jobs available right now in those industries. we're -- we seem to -- we seem to be doing very well hiring. the other key is developing them. >> so from your perspective, based on what you're seeing with your clients, how do you assess
the economy and the jobs market right now? >> first, most ceos -- cfos are hesitant. their confidence waned in the third quarter but i think that might have been a matter of the government shutdown. confidence, i tell people, is as completing as a headline. i think today's report, the last three out of four months have been positive. i think there's momentum. most of our companies i think will gain momentum. i think we're poised for a good 2014. most of our clients, i think, are getting there as well. >> and yet two major pieces of legislation affecting two of the biggest sectors of the economy. finance -- financials and health care. we've got dodd/frank coming up. we have, obviously, obama care. is that going to possibly be a hindrance to growth and expansion next year or is it just going to be a stimulus for your line of work? >> you know, i don't know if it will be a stimulus for our line of work. but for the companies we work
with, aca hasn't impacted them that much. they have more administrative costs, slightly, but it really hasn't impacted them that much because they all have 200 or more employees. dodd/frank, it's been a work in process for a long time. i don't know if there's anything necessarily today that's going to affect it. i think the one thing, the headwind is, potential more regulation as well. >> that's always going to be the case. >> always. >> when have you ever said, there's not enough regulation out there? what is your biggest headwind? >> our biggest headwind, i think, is the government shutdown potential, the debt ceiling issue. frankly, we need comprehensive tax legislation. and if we got that, i think it would make us all more competitive. certainly help our business, i'm sure. but those two or three things, i think, are our headwinds right now. >> immigration reform, is that something important to you as well? >> very important.
it is very important to us. we do bring in people. we need talented people. we need skilled workers regardless of where they come from. so getting some sort of immigration reform is important to us. >> frank freetdman, great to see you. thank you for joining us. >> appreciate it. >> my pleasure. >> thank you very much. >> we have about 40 minutes left to go before the closing bell. the dow now up about 174 points. 18 points or so on the s&p. it is sitting below the 1805 level that would put us back in the black for the week. >> while shoppers are hunting for holiday gifts, some retailers are shopping for a present that could last a whole year and a lot longer. a new ceo. we have that story coming up. and one retailer not looking for new boss, the gap, but after some analyst downgrades may be looking for new sales strategy. . that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others.
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welcome back. in holiday season some retailers are looking for a big ticket item. >> they're looking for new ceos to pull their stores back from the brink. courtney reagan has a rundown of santa wishes this season. >> some retailers asking santa for more than just a strong holiday season. they're asking for a new ceo for christmas. industry insiders add milt there's not a lot of ideal ceo candidate. lululemon said she would retire once a replacer is found. none found.
jcpenney looking for a ceo. board members have changed but the retailer says the ceo search is ongoing. abercrombie & fitch may not be looking to replace michael jeffries, even though some think it should. sources i've spoke to list andrew jennings, someone who's desirable, saks former president, also available, but some question whether he's ceo material. on the wish list, highly desirable but available, ken hicks, brendan hoffman, glenn murphy, and jeff gennette. bloomingdale's ceo is stepping down in february to move into education or philanthropy he says. if he'd be willing, he would be a really big get for someone. kelly? >> i had no idea -- inventory is high, inventory of ceo
candidates. courtney reagan back at headquarters. thank you. while gap isn't looking for a new ceo, they might want to look for a new strategy. several wall street firms downgrading the stock. >> let's talk about it. adrian, thinks this room has run to run while ann thinks gap will go nowhere from here. ladies, thank you for joining us. adrian, make the case for gap right now. >> the case for gap really is about global growth. in the near term, absolutely we agree that it's very promotional. there is a lot of pressure on march margins. we actually think in the near term, that is something to be the status quo. but we like the global growth prospects. the company has yet to really expand globally. opened its first old navy store in japan in 2012. there's a lot of runway for this company longer term. >> at the same time, even coming out with a better than expected november sales number, pam, we've got the shares down again today. i mean, what is it here that keeps dogging this stock?
>> sure. well, gap is a predominantly mall-based retailer. it's not really forward fashion thinking. it's more in line with the current fashion trends. it's competing on price point in an environment where the mall is incredibly promotional. there's not a lot of newness out there in the marketplace. and i think that their customer base is already used to these promotions and wants more out there. then you take into account as well the inventory of the sales spread is widening. comps are becoming more difficult. they're making numbers but based on share buyback and more aggressive cost cutting. we think at current levels there's not a lot of levers to pull. we don't disagree with adrian about the long-term opportunity but right here, right now, the way the whole group is looking into the holiday season, why get involved? why take the risk today? >> what do you think, adrian? >> we have a 12-month view of this stock. i would say few retailers, everyone is under promotional pressure. merchandise margins are down. if you can pull other levers, buy back stock of which they
bought back 4% of their shares in the third quarter, very committed to shareholder value. and touch the st&a lever, to us in the near term while the environment remains very soft, if you can make your numbers, and generate, you know, earnings growth in the out year, that, too, is actually a net relative outperformer. >> the shares here about $39. where do you think they are a year from today? what do you think the fundamental value is for the company here? >> interestingly enough, we don't necessarily agree with adrian longer term. we do have a mid-40s price target when we look out 12 to 18-month time period. we do recognize the international opportunity, a lot of initiatives they have in place and going forward. as we look through the next several quarters, obviously it's not enough to make the numbers. we saw that with a 2% comp, which was ar goou guably very good in this environment. q3 number was solid yet the stock isn't do anything. we think the story is fairly well known and investors are looking for more and need more.
>> adrian, did you have a price target sdm. >> 12-month fair value is $48. that is 15 times the out year. and that's basically 15% earnings growth. they buy back about $1 billion generally in a normal year. and that generates about 6% earnings growth just by itself. >> so, our bull and our bear are $3 apart on their price target. wide gap there. thank you, ladies. have a good weekend. >> thank you. >> now we're losing a little momentum as we head into the final stretch. the dow is now up 117 points -- or 107. it lost the 16,000 threshold. s&p 500 similarly sitting now at about 1802. it may not be enough despite today's rally for us to end the week positive. >> again, it's been the last hour of the day each day this week that has been a very telling bit of the trade. >> huge volume. >> keep an eye on that as we head toward the close here. it's not exactly rocky versus clubber lang, whoever that is, but it is a heavyweight bout
that could deliver a knockout punch for your portfolio. seema mody taking on dom chu coming up. >> and fast food pizza champ domino's knows something about fighting off challengers. the company's ceo patrick doyle will join us. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade-proud to be ranked "best overall client experience."
we're seeing one of the best days for the dow jones in the past month or two. up about 180 points just around that 16,000 line. the nasdaq, interestingly enough today, is a little laggard. only about 0.7 of 1%, 29 points. here's a look at the s&p 500. it is up in the range of 18 points, about 1%. 1803. >> we need 1805.81 to be positive for the week. >> that's right. >> it would be the ninth straight positive week. first time that's happened since january. >> all up there. today's strong jobs report is a rare example of where good news
was actually good news for the markets. as far as it's concerned, as far as fed policy goes, right? >> we'll see. our jeff cox says this is essentially the stock market giving the fed permission to start tapering. we brought him here to talk about that. also with us is matthew slaughter, economics professor and associate dean at dartmouth's tuck school of business. thank you for being here. >> good afternoon. >> jeff, permission to taper, what do you mean by that? >> look, kelly, for a long time we've watched the tail wag the dog as far as the markets go. the market's the tail. the fed is the dog. as you alluded to, we've gone through so much of bad news being good news and good news being bad news. for once the market looked at this report today and said, you know what, this is good news. it's the sign of a stronger economy. and instead of recoiling at the possibility that the fed may take away the punch bowl, the fed -- the market actually did the mature thing and went ahead and said, okay, you know, we're going to buy on this. we realize things are getting okay now. even if you taper,i it's going o
be okay. i think this puts pressure on fed, probably taper in january ahead of that march schedule. >> what do you think, professor, base on the metrics the fed has publicly set for itself, is the economy in the territory right now where they would think about starting to taper? >> jeff is right. the economy is definitely healing. this is a bit of an early christmas present, jobs report. payroll job gains of 200,000 a month for many months now. earnings up a little lit, average work week up a little bit. it wasn't everything on the christmas list. one thing in particular is the unemployment rate is ticking down. mainly because people are exiting the labor force. not because so many of them are finding jobs. so, i think many leaders at the fed will be happy with this jobs report. but they'd like to see continued improvement like this before tapering. >> i would beg to differ with that. we actually saw the labor force participation rate increase. it was only about 0.2% increase
but it did go up. i think it was a rare month where we could say the unemployment rate didn't come down for the wrong reasons. i think the big question here is, if the fed stays in the game, what more can it really do? how long are we going to keep pushing on the same string and hope that, you know, miracles are going to happen? i understand that we're not at the fed's metric of 6.5% unemployment, which incidentally i think is going to fall all the way to 6.0%. that's for rates. and we're talking about two totally different things. talking about ending the so-called money printing versus raising rates. we know rate increases are a long way off but i think tapering can happen soon. >> professor slaughter, i would love to know whether you think we've kind of -- is further improvement in the labor market possible, sick lickically speaking? are we running into some structural problems here that go back to what you've written at great length about, what's happening with globalization, technological change, et cetera? >> great question, kelly. i think the fed when it looks
around at broad marketplace, they see how strong it can be. there are also other parts where unemployment rate is below 1%. there's some counties in and around the back bakken formatio north dakota where they see growth the fed would like to see. driven by technological change, entrepreneurship that doesn't have anything to do with the fed's balance sheet. >> we need fraccing in every 50 states, is that what you're saying? >> we need change like that in all 50 states. that's what the fed would love to see. they know there's only so much they can do to try to generate that sustainable growth. >> it's interesting to me. i talked to a couple job placement people heading into today's report. i'm still hearing the same song from them about the skills gap and inability -- of folks out there trying to find jobs but not being able to be matched up because of skills problems they can't -- employers can't find the people with the right qualifications for the jobs they want to fill. so, the fed can't do anything
about that. >> we just heard from the cfo of deloitte. frank friedman was saying, they don't have a problem finding skilled employees. and they hire 18,000 people a year. >> interesting. for their business, i did hear that. accountants are in pretty big demand right now. in those particular fields. i think as far as high technology fields, those kind of things, we still have problems there. so, it's very uneven. again, it just goes back to the original question we talked about. what can the fed do? it's time for them to start to normalize and take their foot off the pedal. >> i have to ask you, in a word, raising the minimum wage, good or bad idea? >> good but not a silver bullet. >> all right. thank you for keeping that short. >> good answer. >> we'll bring you back to explore that theme. >> i would love to be involved in that conversation. >> i know you would, jeff. see you later. 20 minutes left in the trading session here. we continue to lose altitude off the highs. the dow at the peak was up 200 points. now up 159.
and back below 16,000. we're at 15,980. >> coming up, today's main event. seema mody, dom chu spating over today's market. seema saying it's too expensive, dom saying it's too cheap. before their gift helped preserve the point... before a credit solution was used to expand their business... before trusts were created for their grandkids' educations... they chose a partner to help manage their wealth... one whose insights, solutions, and approach have been relied on for over 200 years. that's the value of trusted connections. that's u.s. trust. see, i knew testosterone could affect sex drive, but not energy or even my mood.
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our dynamic duo in opposite corners of the ring. >> seema noticedy says she has the facts to say the market is too expensive and dominic chu says we have a lot more room to run even with the rally. over to you guys. >> the first reason experts say this market is too expensive. a widening divergence between stock prices and underlying earnings growth. s&p 500 average earnings growth from 2011 to present date has been decreasing while forward priced to earnings ratio is how much investors are willing to pay per dollar of earnings has been increasing dramatically from 10.4 in august of 2011 to 15.5 in 2013.
in essence valuations are increasing without strong underlying growth. that's a signal, guys, we have overvalued stocks. >> i would say overvalued stocks, yes, you may want to think of it that way. let's put it in historical perspective. when things were really overvalued, they were really overvalued. take a look at this chart. this shows you the price to earnings ratio, what seema said, how much per stock price dollar you pay. back during the peak in 2000 you were trading at 30 times earnings, paying $30 of stock price for every $1 of s&p profits. today that's more like 16 or 17. even with record highs, valuations are still relatively within historical norms. and certainly far away from the peaks we saw back during the tech bubble. maybe valuations not near as bubblicious as people think. >> how many stocks in the s&p do you think are up double digits? >> i would say at least 400 of them maybe. >> okay. you're right. it's 400. 400 out of the 500 stocks on the
s&p, so effectively, 80%, guys, are up double digits this year of which 90 are up 50% or more. bottom line, this market is sitting on monstrous gains. it's only a matter of time when money managers book their profits and say, happy holidays, i'm out. high fliers, stocks up triple digits. netflix, best buy, delta airlines, celgene. one trader put it to me, imagine this, if you missed out on this rally of 2013, are you willing to pay top dollar for these stocks, especially the fact that stocks are trading at price valuations. >> is it really top dollar, though, if we were just to say priced to earnings ratio are where they were, and i will say this, but people might pay more for every dollar of earnings. adam parker at morgan stanley, who a couple years ago was the most bearish strategist on wall street, is the most raging bull. the reason why, he says multiple expansion can happen. people will want to pay more for
every dollar of earnings because of major thing. belief the fed can distinguish between tapering, which is just withdrawing some stimulus, versus actually raising interest rates. if people can get their arms around that, that's a good sign. also a lack of credible bear case against any kind of an earnings growth scenario. there isn't one right now. companies are still trying to boost their profits and they can still do so, credibly speaking. let's not forget, we're not the only economy that's growing. think about china, japan. it's a global sinkization of economic expansion. that's why a lot of investors with cash still on the sidelines, a lot of cash on the sidelines, will go back and buy stocks. >> i've got to say on your note when you were talking about corporate earnings, yes, we had better than expected earnings in q3, kelly and bill, a lot was due to cost cutting. not because revenue was growing. that in itself is a warning sign. >> still, it's profits, guys. it's profits. >> it's re-engineering. >> you know, you guys remind us when we're sitting in the makeup chair downstairs. we have this conversation all
the time. good job. thank you. we're coming back. down about 180 points right now. so, we're sitting right around 16,000. the s&p right around 1802. we'll see what we do here as we head toward the close in 14 minutes. >> regardless, it seems as though we'll break a five-day losing stretch. coming up, former fed chair, paul volcker, new financial regulations bearing his naming. now regulators pushing a tougher rule that could hit bank executives pretty hard. that story coming up. tdd#: 1-800-345-2550 trading inspires your life.
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about ten minutes left. we've had a pretty good rally day. market going sideways and we wonder if we can finish above 16,000 on the dow. just below that now, s&p holding just above 180 and the nasdaq is up -- actually, the weakest of the major averages today, 4,059. joining us, david darst from morgan stanley wealth management. you have become among the bulls for next year. >> that's right. we're expecting a multiple of 16.4 times. one expansion point in the multiple times 122.90.
that leaves 2,014 at the end of 2014. >> how clever. how clever. >> that would be 11.4% up from here, from here. in price terms only. not the dividend. >> i got it. today, very good jobs report any way you looked at it. if that keeps happening, the fed is likely to taper sooner rather than later. does that change your scenario to some degree? >> a sign of health. you want to see normalization of interest rates to show that the patient is leaving the hospital under its own power. so, we see this as a good development. it would be wonderful if they could start the tapering in december. december 17th, 18th. or january 28th, 29th meeting, bill. it's a good sign to us. >> it would also likely mean a rise in long-term interest rates. i mean, today we got to 29 -- 2.93 or something on the ten-year. that doesn't seem to bother the stock market. why not? >> it's up 100 basis points, that's hurt bonds and caused some individual investors to
throw their money into stocks, as you know. the ten-year bond a move like that, bill s down 11% in price this year. the 30-year bond is down even more. maybe 16%, 17% in price. you then add back the coupon to get a total return. so, that's -- that's been one of the drivers of people into stocks. >> what do you stay with the stocks? >> we want to focus on health care, which has done so well this year. we're staying with health care. we basically now start to pick up technology, okay? which we've been under, underplaying that. one thing that we've liked a lot, we talked about many times, consumer discretionary and consumer staples. both coming here we would begin to underweight those. >> really? >> we would take money off the table in the consumer and go towards more of the industrials, the technology and the health care, which has been so good. we still like japan, too, bill. >> third quarter gdp looks like
it's going to be 3.6%. you see that strengthening down the road? i mean, is that -- is that the kind of expansion you're seeing here? >> fourth quarter number. our economists say, real final sales were up only 1.9%. a lot was inventory, which will take away from the fourth quarter. we've seen all day long people around the street, morgan stanley and others, lowering fourth quarter numbers. people ought to be prepared. if there's any pullback on that, then you want to add money to the market. >> and we're up 190 points. we're back above 16,000 at that point. >> god be with you, nelson mandela. >> what an amazing life. thanks very much. see you later. we'll come back with the closing countdown for this friday. and after the bell, look up in the sky. it's a bird, a plane. no, it's actually something better. it's a pizza. forget amazon's drones delivering books. there's pizza from domino's coming through the air. the ceo of domino's will join us and tell us if more drones like this, tested in europe, by the way, are in his company's future here in the u.s. or was this just a publicity stunt.
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200 points. came back a bit. now heading higher again. gain of 1.2% as we head toward the close. for the week, remember we had seen down days to this point, but for the week, we're going to be negative by half a percent here unless we see a little spurt come in at the close. we'll keep an eye on that and on the s&p, which is close to being unchanged for the week. the ten-year, huge move on the open this morning. look at the spike after the unemployment number came out. got to 2.93 then pulled back. we're at 2.86 right now. warn myers, a lot of people were surprise we had saw a rally in stocks on that unemployment number. not a selloff. >> exactly. a lot of people were surprised. you know, it's been bad news is good news and good news is bad news lately. this is one good news appears to be good news. i think what basically happened was, there's been so much talk by the feds out there, tapering is tapering, it's not tightening. and preparing us for that. the economic data we got today, the jobs in particular, which is a key number, key data they're
looking at, is pretty solid. we've had a couple good months in a row. i think people are finally realizing, the economy may be a little better than they thought it was and maybe we can withstand a little of this. >> we've been keeping an eye on the last hour of trade this week. sometimes it was a selloff at the close. not now. we're up 200 points again. we're back to the high here as we head toward the close. do we read anything into this? >> i was getting concerned that the imbalance at the end of the day, continually buy side for many months, converted and switched to sell side for the last week. today was a little to the sell side but looks like people are ignoring that and buying right into the close here today. i think that's a good sign. maybe alleviate the selling we saw this past week at the end of the day and maybe we'll keep that from coming back. >> after all is said and done, we may finish neutral for the week, for both the dow and s&p after all that. >> everyone came in this morning, felt like we were down a ton. >> yet the ten-year yield is up big for the week. and it looks like it wants to
continue higher here. i keep asking, why isn't that a problem for the stock market? >> it's a very good question. again, i think we're not quite at a level yet it's going to convert money out of the equity market to bond market but i think we're getting closer. >> so, what are you doing here? did you buy this dip? are you -- >> i think we hit a couple key levels on the way back up today, particularly on the s&p. 1802. i think that gives a pretty decent signal that momentum upward is back again. and we'll see what monday brings. but i would be a buyer here. >> so, you guys who are watching the charts for those resistance levels, if we can get above a certain levels, you think momentum -- >> can push it higher. >> and keep buying. >> correct. >> thanks, warren. we'll go out near the highs of the session again. this last hour has been very important to watch. and today it's taking us back to the highs of the session after that much better than expected jobs report this morning. so, the dow's going to finish up
about 200 points. unchanged for the week, essentially. and the same thing for the s&p 500, up 20 points right now. that's the first hour of the "closing bell." stay tuned. kelly evans and an all-star -- wait until you see who's on the panel this time. coming up on the second hour of the "closing bell." have a good weekend. and welcome to the "closing bell" at this hour. i'm kelly evans. stocks just snapped a five-day losing streak in pretty glorious fashion. let's take a look at the numbers and see how we're finishing up the session. dow jones just shy of 200 points, percentage and a half, that's the best day in a couple months. the nasdaq is a bit of a laggard, up 0.75 of 1%. dow up above 16,000 so it reclaimed that round number today. the s&p 500 i'm watching this very carefully because it's going to be the decimal points that matter here. closing, it looks, right on the
nose, 1805, but might be shy of 1805.81. the significance is that would put it in the black for the week, ninth straight week but looks like we're finishing slightly lower. joining me now is private investor and former wall street journal columnist, evan newmark, j. burns, and cnbc contributor greg ip, and joining us is "fast money" contributor, tim seymour. welcome to all of you. tim, your thoughts here. is this enough -- you know, i was going to ask about buying the dip but i'm not sure we had a dip if we're talking about a move of less than 1% earlier this week. >> there was a lot of anxiety. if you look at where the heaviness was in the market, it was in interest-rate sensitive sectors. same data knocking us down, is the same that were rising today effectively. if you want to take away the big thing today is ultimately
looking forward s the fed going to regain credibility? i hope they do. that's my christmas wish. i expect a taper in december and i think that's very good for the markets. markets are trading good on good news. that's what we want to see. >> j.j., i wonder, to some extent is this people coming out of the woodwork to buy after the losing streak? is it about the jobs number this morning? what's driving things right now? >> what's happening right now is that investors feel like low interest rates are going to be in for the move and people will continue to buy in. >> what do you mean in for the move? >> in for the move the fed is going to keep rates relatively low. the real important thing is there's never been, in six decades, ever a period where the market's been up more than 20% in a given year with a following year it hasn't been up some positive number. >> you're still bullish? >> gdp is continuing to rise. >> i'm bullish but to a point to get back to strategic planning to your asset allocation mix. it's important investors and the regular retail guy stick to
knitting on the portfolio management skills. >> you look at the market, what jumps out at you, michele? >> every single cycle there's a moment where the market turns. where good news starts out bad news because you worry about the fed, right, et cetera. the fed will get easier whether it's taper or raising rates. and then good news becomes good point. feels like we hit that point. the underlying economy is what drives the stock market. >> are we having a moment here, evan? >> there is a moment. it's not just between the two of us. i think the big story is, we are looking -- i'm going to call it the official end of the 31-year run of a bull market in bonds. >> wait a minute. >> i heard that before. >> you just said 31. >> i think it's 31. i think it's 31. >> people have been saying 30. they've been wrong. >> i think it's 31. i think it's important because what's going to happen in the next few months, it seems very unlikely, given the employment report and what's going on with some of the numbers, gdp numbers, that the ten-year yield
will ever move down below 2.50 again. >> to what, snow. >> hold that thought. it's interesting. we asked bill gross about this the other day. i said would the ten-year go below 2.50. he said no. greg, what say you? >> first of all, i want to congratulate evan on that gutsy call on the end of the bull market in bonds. my goshgs that has been a widowmaker of a call for so many years. but my heart is with him. i want this to be the end of bull market in bonds. the only reason yields have been so bad is because it's so low. not just nonfarm payroll. hours were up, earnings were up, strong consumer confidence, good consumption making fourth quarter look like it's going to be a good number. what the market is starting to tell us is this feels like an inflexion point on the economy. that's what the ism told us the other day. when you feel some inflexion
point on the economy, you don't feel the fed won't be your friend any longer because fundamentals are falling into place. >> tim seymour,fy like this narrative, if i think we're at an inflectioinfliction point? >> some of us are somewhat cautious but i'll say this, there's a spring under emerging markets. if you look at the spread of the s&p to eem this year, it's down 32%. today you had emerging outperform the s&p on this data. which tells you that people are getting comfortable with both the ism growth against prices. in other words, there is no inflation. this is very positive for the rest of the world. as talked about by other panelists, we've seen pmis around the world excaccelerate the last three months. that's a good trade. mexico over u.s. i also like the diversified miners, bhp, rio tinto. >> i see you nodding. >> emerging markets, i still
think, though, there's a section that you have to worry about 37 those countries with current account -- like india, indonesia -- >> the fragile thrive. >> exactly. they are ones -- you got arguments on both sides of that trade. oh, it's never going to be that bad. they have more cash reserves than in the past, et cetera, et cetera. still, have you to stop thinking of emerging markets as a whole group -- >> can't blindly jump in. >> pmis have come in so positive, suggest 5%, which lead to a gdp globally of 3%, 3.5%. emerging markets is poised to grow. they typically fall way behind where u.s. stocks are. they're going to be playing catch-up. i think that started back in june. >> evan, you hear all this upbeat talk. doesn't make you a little nervous? >> no. >> come on. >> i'm the ultimate contrarian. it's too exuberant right now. i think the most interesting thing about all these reports
which have generally come in very positive is just how low our expectations have become, how mediocre the recovery is, so with numbers that are halfway decent come in, everybody's like, oh, yeah, the sky's the limit. let me tell you, a couple years into a recovery, this is where we are. i mean, they're good numbers but they're not great. >> this is the point, right? it's taken us 4 1/2 years to learn maybe we aren't going to get to that point so we have to sort of trade with this new world. in fact, this is a broader debate right now. is it the larry summers kind of secular stagnation, you know, the fed needs to make sure it doesn't do anything too soon to trip up the apple cart, or is it what we were just talking about, that maybe actually there is powerful momentum heading into 2014? >> the fed needs to regain credibility. >> first of all, have you to ask yourself which larry summers are we talking about? you know what's interesting is last april he gave us talk to a conference. he talked about -- he said, he thoit the economy was going to surprise on the upside and growth would be stronger. and the fed would be dialing back stimulus sooner than most
people thought. and now here you are like in october, he's actually telling the opposite story. i kind of like the larry summers of april a little more. that seems to be the story unfolding here. look, to evan's point, you know, it's a tyranny of low expectations. if you're bullish, you're looking at real gdp next year of 3%. nomal gdp of 4.5%. if that translates to revenue growth of 4.5%, it's hard to justify what we've seen with stock valuations at this level. so, the fact the economy is turning around doesn't necessarily mean it's a safe place to be in the market right now. >> okay. hang on one second, j.j. i want to bring in larry mcdonald from new edge usa for his reaction to some of the data today. larry, i wanted to ask you specifically about gold, because i couldn't quite get my head around it this morning. we were down before the jobs report. it hit. we spiked down. then we were moving positive. is it -- you know, how do you read gold here? what do you do with it? >> well, i sense a massive
underperformance of minors versus gold. that's very clear. i think overall tremendous tax law selling, tremendous capitulation. we saw this at the end of the second quarter with gold. just an absolute rush to the exits, quarter end rebalancing is a phenomenal time for investors to take advantage of capitulation. and that's what we're seeing with gold. >> okay. so, what you're saying, in other words, they take one of the few underperforming assets of the year. it's kind of its own idiosyncratic story, but is that it for gold? are we going to fall below 1200 here? >> no. i think this is a classic capitulation, a fear moment, where you have a lot of quarter-end rebalancing. a lot of pms have to -- you have risk manager tapping yourself on the shoulder. anyone who's taken professional risk, i've been there, the risk manager comes in, taps you on the shoulder, you have to cut the position in half. so i think in the first quarter, i think after january 1st there's going to be nobody left to sell gold and, say, coal names and gold names. both of those sectors are
completely decimated. >> often there's a relationship between what's happening there between the emerging market trade to some extent. i want to ask you if you have a view it and what happens to the precious metal here? >> i think gold has trouble down to 1100. i slightly disagree with larry only because i think there are some crowded longs in this trade. i think gold ultimately has a place, the same reason people were buying it, central bank diversification, is alive and well. i think that's something they have to adhere to. when you look at where we are with global disinflation, i won't say deflation, but prices are a big problem. look what's going on with commodities. look at the oil glut in the world. i think that's negative for gold. i actually would be in other parts of the commodity chain. i agree gold is oversold. i agree iron ore is oversold. i would own copper. >> a lot of people are talking about how commodities are clearly not the place to be right now. j.j., anything to be said from a portfolio point of view for all the people who were told, look, you've got to diversify, you've got to have a little exposure to this sector. they've been hammered by that
exposur exposure. is now time to look at it for opportunity or do you sell and walk away? >> i think you brought up an interesting diversion between gold gid and mining stock. those who own gid have gone down but not as much as the mining companies. there's value there and gold is considered an asset class and miners are considered stocks of that asset class. if-t does have a place in the portfolio if you're a long-term, diversified investor -- >> but gold -- >> -- you have to take a look at things undervalued and look to pick them up on the cheap and no one wants to talk about them. >> real quick, what are a couple of those, j.j.? other than gold, are there any other candidates you would mention right there? >> i would look at the etfs of mining companies. and i would also -- i would also take a look at in the bond side as far as your equivalent for baby boomers going out looking at etfs so you can bullet point out in preferred or going into
financial areas -- >> i'm going to call my parents afterwards and let them know what to do. tim, did you want to know wh-- t in here? >> not the majors but mid caps and a couple majors, they took their hedges off 37 it's about balance sheets. if they're stock to price gold, still have balance issues. have you to be careful who you are buying in the gold mining space. just because it looks cheap on last year's numbers, that's not next year's numbers. >> larry mcdonald, final world to you. >> tim, they said the same thing about the financials in the fourth quarter of 2011. balance sheets were a mess. you had all kinds of exposure to europe. in 2012 the financials were up, you know -- >> apples and oranges. financials to gold miners, it's totally different. the financials have had decent balance sheets for a long time. i wouldn't agree they had bad balance sheets. >> the street -- everybody on the street wanted to sell them in the fourth quarter of 2011. every single analyst. bank of america, no nobody wanted to buy the stock at $7.
now everybody loves it, up 150% from that level. >> larry, do you like the financials here today? >> no. i don't like -- i don't like any asset class is that has -- >> you don't like anything. >> no, no, any asset class that has -- where the entire street likes the name. i like -- >> does that include the u.s. economy? >> no. the coal names -- i'll tell you what i look at, kelly, year end, when i see credit default swaps in certain names like peabody, havnanian outperforming the equity, those are names i'm positive on. it's a good sign going into year end. >> larry, thanks so much. thanks, everybody. we'll keep the panel around. tim seymour has to run. can you catch him on "fast money" at 5 p.m. much more today on the power packed rally. we'll get the view from the floors of the nasdaq. domino's ceo weighing in on today's jobs report and how
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welcome back. today's rally still wasn't able to erase all the dow's losses for this week. let's get more perspective this week from bob pisani at the new york stoxx stock exchange, bob holding down the for the at the cme, joining me now. bob, did this rally take people by surprise in terms of its size and scope? >> oh, yes it did. a lot of people thought we would get 200,000 jobs. that wasn't the surprise. the surprise was the market reaction with the dow up 200 points, ending at high, and bond market almost not reacting? we've been wondered about tapering being a headwind for stock. suddenly we get the mother of all rorlgts. it's generally better than expected and the market reacts like, tapering is not a problem. now everybody is trying to figure out, are they trying to tell us this is not really an issue? i personally don't believe that. i think tapering is going to be a bit of a headwind. it just wasn't very obvious today. >> interesting. sheila, by the way, the nasdaq
was underperforming today. any idea why? >> you know, it was underperforming today, kelly, but it was the only index out of all the three major ones to close out the week with a gain. chalk unup for the nasdaq, hitting a fresh 13-year high. today is one of those days the nasdaq -- it's almost ooets easier to talk about the losers because there were so few of them. about 85% of the nasdaq 100 in the green today, semiconductors has been a really good source of strength for the nasdaq all week. we got that intel upgrade today, some positive earnings this week, also positive industry data. biotech continuing to be an outperformer, celgene hitting new 52-week highs. we saw the momentum names today not participating in the rally. tesla, facebook, a lot of those names didn't participate. and how about apple, the one stock you think that would help lift the market actually in the red today. that was a little surprising twist of things at the nasdaq. >> i want to come back to that in a second. bob, first to you, what were the
big movers at the cm snechlt. >> there weren't a lot of big movers other than s&p futures. what bob said, muted reaction of the treasury market. the treasury market is shrugging off the data because they're expecting the tapering gt. they think the federal reserve has tapering schedule set some time next year. we simply don't have the engine in the economy for the data to overperform consistently. however, today's number actually was that. >> bob, some people have argued expost facto, it has gone from 2% at the end of october to 2.9% today to reflect the somewhat stronger economy. i'm not sure i completely agree with that. i think the market should have gone up higher, the bond yields, and they didn't. can you make an argument that we've already adjusted a little bit to the prospect of a taper? >> that's exactly what i'm saying, bob. the treasury market has been expecting the taper, whether the economy strengthened or not.
no one down here expects the economy to absolutely explode into a 4% or 4.5% gdp. but they think the fed is going to taper anyway. that's why you've seen that orderly move in yield. i would argue this has been orderly versus what happened when ben bernanke announced that sort of faux schedule in may. >> earlier this year. >> i think that was a shock. it was an orderly move -- >> i was going to say, it would almost be a relief not to talk about the fed so much at the nasdaq, but is this not the second straight day, sheila, we've seen the social media names taking off? >> we've seen some shine taken off. they say it's profit taking. we're actually seeing it in old tech as well. semiconductors have been a perfect example of that this week. we did get positive industry data coming up from semiconductor association. intel, it was all about stabilizing corporate pc demand. you hear things from other chip names. really good news potentially when it comes to enterprise
demand, korment demand. good headwinds for the economy here. >> sheila, the two bobs, thank you all and have a great weekend. appreciate your time this afternoon. >> you too, kelly. >> bank ceos could be on the hook for bad trader behavior if regulators get their way. even if they have no knowledge of what those traders did. up next, the so-called volcker rule racing to the finish line. we'll discuss a provision that could subject bank executives to serious lawsuits. capital to make it happen?
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welcome back. financial ceos in the cross hairs as so-called volcker rule could subject bank executives themselves to lawsuits if their traders don't comply with new rules. kayla, walk us through this and just how personally liable are these executives potentially going to be here. >> you know, it's really interesting. it's something, of course, you can imagine a lot of executives don't like. this rule is set to be approved on tuesday. more recent drafts of the rule bandied about and being finalized, they carry new language that says a bank's management team must attest the company is in full compliance of the rule. we don't know what form this could take, a more informal discussion with the board, a report. we know if the firm breaks the rules, it gives the fed more freedom to go after executives.
money backed by customer deposits, you and me, we put in our account. every regulator agrees, jpmorgan is losing $6 million on a london whale trade. regulators wanted a strict rule. the worry here, if you make it too strict on the definition of what is a trade, what is a hedge, then you could potentially hurt liquidity in the market. so putting this ceo language in there, that's how they could make it strict without potentially hurting liquidity. >> kayla, do you think it took people by surprise to hear that, again, they might now be on the line, i guess, comes down to a question of legality, does it not? if you are the bank ceo and something happens under your watch, can they go after you personally and are we talking about, in financial terms, or, you know, lawsuits? >> i think it's a surprise insofar as it wasn't in the earlier drafts that we've seen in the volcker rule. the last one we saw was in late 2011 and this wasn't in there. they put out the idea for public comment and you can imagine a
lot of financial executives were not happy with having this in there. the fact it is now coming back to the fore is a surprise but not the first time executives have had this sort of liability. there's regulation by the exchanges for broker/dealers on certain supervisory controls of trading that puts the executive on the hook and sarbanes oxley, executives have to sign off on all their financial statements to say these are well and good. that's gotten a few executives in trouble since then, but nothing really, you know, all that bad, i would say. >> kayla, stay right there. j.j., is this a good move? >> it's not a good move. we don't have a definition of exactly what the comprehensive nature of what the ceo and what is the compliance area going to be doing with these laws. the ceo -- >> do they have to spell all that out? >> it's not spelled out and it should be. the ceo can't literally blanket sign everything else. what i feel it should be from my per sicktive is there's a compliance department, a ceo. they get together and collectively come together and sign off on that agreement. everybody has a level of
liability. >> there is a certain -- >> wait a minute. >> you touched it a little bit, kayla. guess what, there's something called sarbanes oxley. that was the round of financial legislation under george bush that was going to prevent the next crisis because every ceo was going to have to sign off. you should have seen cnbc the first day that all those s.e.c.s were filed. we photo copied all of those signatures, put them up on huge screens. we even had a handwriting analyst come on and look, which were the honest and dishonest ones. the bottom line? guess what, we had the financial crisis of 2008. this is a giveaway to attorneys who would like to sue. nothing more. >> is this about preventing another financial crisis or just making sure people -- is it something more like the london whale situation where if you have wrongdoing under an executive, the executive is held -- >> the underlying issue is the following -- once again, regulators trying to make the world think they're making the world very, very safe so everyone can go to sleep and think things are going to be
fine. financial crisis will always happen. you need to pay attention. no matter who signs off on what, you -- you've got so many traders on a desk. you think can you look at every single one of them and know -- >> come on. >> hang on, evan. >> kel y you know, i was -- when i was at goldman sachs and later ubs, i had to sign off on various things that people who worked for me as a supervisor did. and i can't imagine someone being very happy for signing off -- >> would you feel comfortable as an executive now under these new rules? >> it depend. the devil's in the detail. we don't know what the details are. guys who are already worth a lot of money, if you think they're going to sign off on something and then have some rogue trader do something stupid and have their personal wealth at rivenlg because of that -- >> no, no, you'll now have a new business for the insurance companies. they'll put out -- same way now f you're on a board, have you
insurance about getting sued. they'll have a new round of insurance to get sued. it's all -- >> kayla? >> the banks feel they won't be able to get out of this. one of the things they're talking about doing is creating tiers of certification. if you're jamie dimon at jpmorgan chase you can subcertification, the principle of a trading desk so they have more direct oversight of that united. it's really more about culture, at least it feels that way this time around. the speech earlier this week, jack lew, treasury secretary said, if you set the right tone at the top, you will create a culture of compliance. it's not a perfect strategy but it's one way they're trying to go about it. >> places like goldman sachs are run by traders so it's about creating the right culture. >> great point. last word to you, j.j. >> a bank should be able to mitigate their risk. if they're taking on a trade and it's to profit versus mitigating risks, it should be clearly defined. >> kayla, thank you for the details on that. we'll watch and see what
happens. coming up, pizza delivery by drone. domino's pizza ceo weighing in on how real this service could be. we'll also talk to him about minimum wage and much, much more. [ female announcer ] thanks for financing my first car. thanks for giving me your smile. thanks for inspiring me. thanks for showing me my potential. for teaching me not to take life so seriously. thanks for loving me and being my best friend. don't forget to thank those who helped you take charge of your future and got you where you are today. the boss of your life. the chief life officer. ♪
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welcome back. domino's pizza is looking to international markets now for its future. in fact, this is the global domino's week where customers in 42 countries can get half off their pizza. the stock, by the way, has been tasty to investors. it's up 60% this year. the company now looking at major expansion across several markets. joining us now to talk about that, domino's pizza ceo patrick doyle. patrick, good afternoon. thank you for being here. >> thanks, kelly. appreciate it. >> and you're just speaking of international expansion, we were supposed to talk to you a couple days ago. you were in india, though, and you had gotten ill, we understand. >> yeah. >> how much time are you spending overseas? tell us about that. >> that was actually my second trip to asia this month. i was in china, korea and japan earlier in the month. and then india for five or six days. and i -- it clearly is where a lot of our growth is coming from. india has been a booming market
for us. i think we're the largest restaurant chain now in india. it's grown very fast. i'm very excited about what's happening there. i think it is runway there is a long way out. we're sxited about what we're going to accomplish in that market. >> certainly when you think about how saturated the u.s. is for pizza delivery, if can you take anything like that level of growth overseas, it has to mean huge expansion. i wonder, though, what's the breakdown in terms of revenue for your company today overseas versus domestic and where do you expect to see, i should say, in the next five or so years? >> yeah. so, we're actually now bigger in terms of retail sales outside the u.s. than inside the u.s. we're in about 75 markets today. what i think you'll see is by the end of the decade, you know, we'll be 50% to double the size in international that we are domestically. clearly, it's where the majority
of our growth is going to be coming from. >> does that suggest as well you don't see growth in the u.s.? >> no, we absolutely can grow in the u.s. it's just -- you know, at this point we're just under 5,000 restaurants in the u.s. i think i can see another 1,000. >> wow. >> certainly a lot of same store sales growth that can come. but, you know, 95% of the world's population is outside of the u.s. clearly over time that's -- that's where the majority of the growth has to come from. >> i'm amazed can you grow by 20% in item of the restaurant count here. speaking of growth and just staying profitable as you do so, there's a huge debate right now over raising the minimum wage in this country. how does that affect domino's, if it happens? if the minimum wage is $15 an hour, what does that mean for your business? >> certainly it would affect us. i think the biggest problem with it is that it hurts the people it's designed to help. you know, we've seen it in the past. when you increase the minimum wage, it's going to slow job
growth or reverse it. and you look at the numbers that came out today. they were good. you know, not great yet at 200,000 plus. you know, we really need to see morrow bust job growth to get this economy where it needs to be. i'd be very concerned that a minimum wage increase would reverse that. >> what is the impact on your own -- i mean, how many employees at domino's are making minimum wage? a number of them? >> yeah. majority of our people, straight wage may be minimum or a little above but with tips, and the majority of them are delivery drivers, we've got a very different model. so, they're bringing in tips. they're actually making more than that. but, you know, at the end of the day, frankly, i'm more concerned about the overall effect on the economy than a direct effect on us. it's just going to slow things down. >> one more question. i want to bring our panel in here on that point, but i can just speak from personal experience. everyone seems to order domino's
pizza online and they use the tracker to watch and see how long the pizza gets to them. that move to online, move to mobile, how fast are you seeing adoption? how important is that? >> it's now 40% of our business. domestically and almost that same number globally. we're one of the largest e-commerce companies in the u.s. you know, customers are telling us experience is better, they have the whole menu in front of them, they can access it through mobile devices, online, on their tablets. it's clearly where our customers are going. it's something we're going to continue to push. >> want to bring the panel in just for some of their thoughts here, patrick f you'll stay with us on this topic. >> of course. >> greg, first, i just wonder -- again, not to go back into something we've discussed at length already, but you know, when you hear domino's say it's not going to affect them directly but worried more broadly about raising minimum wage in this country, what do you think? >> this is an important
question. economists are deeply divided. if you raise the minimum wage, does it have a big effect on unemployment. patrick, do you think you would have to cut some jobs because of the higher cost? if not, how do you pass the higher cost of minimum wage on? does it ripple up through the entire wage structure of your restaurants? >> yeah, i mean, you know, certainly you would see some of that. first of all, economists aren't divided on this. 80% to 90% of the studies that have been done out there have said it's going to hurt job growth, affect jobs. so there really is no division. i mean, it's -- you know, the vast majority of economists are saying it will hurt job growth. if you look at what has happened in the past when there have been big moves, 2007, '08, '09, economic growth clearly after that has not been good. the last time they went after minimum awage aggressively was in the late '60s and you had the
'70s after that. you can't argue with the fact, if you drive up the cost of labor, people will figure out ways to be more efficient. >> mr. doyle, i have a question. in terms of your costs, labor costs, this move to online, i noticed you have an ad campaign about promoting the online site. what has happened to your labor costs as you've gone more automated? have they gone down steadily? are you making incremental profits because your labor costs are dropping from moving to online? >> it's not a big effected but we definitely see some leverage kind of on the labor line. you'll see some reduction in the labor line. not a big effect but certainly some there. it's part of why those orders are ultimately more profitable for us. the biggest driver on that, though, is customer satisfaction. >> talking about automation, what about drones? you've done some experimentation, but amazon got all the buzz. >> yeah, we got some company. >> i mean, how real could this
be? >> you know, i -- first of all, i think our drone was much cooler than amazon's. >> it was, for sure. >> i looked at it. we had better music in the background, you know. look, we're going to look at it. you know, i think that's a long ways out. but, you know, we're definitely pushing on technology. so, i don't know whether or not that one is going to be one that's -- that we can really drive, but -- >> patrick, i just wonder if seeing what amazon is doing makes you think we need to be more serious about this right now? >> yeah, you know, certainly we'll look at it. but it's still going to be a few years before i think that's going to be practical. >> well, we do have some pizzas here. >> i don't think you have to worry about the drones in new york city. >> patrick doyle, the ceo of domino's pizza. thank you for joining us. have a great weekend. >> absolutely. >> as long as they don't deliver big sodas. >> they're not allowed. red hot and icy cold. find out what's topping the cnbc hot list next. plus, you can't say whoa didn't warn you. winter is coming. we'll have the latest forecast
on a terrible storm across the belly of the nation. will it have an impact on retail sales? ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. get the best offers of the season now. lease this 2014 srx for around $349 a month. during the season's best event from cadillac. ♪ so i can reach ally bank 24/7, but there ar24/7.branches? i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water.
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meteorologist jim cantore from dallas. it looks pretty frigid where you are. probably colder than here, in fact. >> reporter: we're sit ageting 5 degrees. you're right. it is cold. the problem is we're going down to 19 tonight. even though the roads have improved swimmingly since our ice event this morning, we'll refreeze all of this tonight. my hats off to the texas department of transportation. so, here we go. let me just set the stage for you. we get a quarter to half inch of ice. then we get 3 to 4 inches of sleet on top of that. they're salting, they did all the prework yesterday with the pre-emergence and pretty much kept these areas clear. especially the high overpasses. even though the cars are moving slowly, they seem to be moving along a little faster, certainly, than they were this morning when it was just absolutely glare ice through here. the real problems have been at the airports. i mean, we've had 1300 flights cancel today in and out of
dallas/ft. worth. a normal day with traffic out of dfw is about 1700 aircraft. so, three-quarters of the flights at dfw canceled today. tomorrow, i just looked at the log, we've only had 100 cancellations. they expect a dramatic improvement at dfw tomorrow. of course, everybody now is trying to get out. it's going to be a log jam. they're saying, hey, look, if you're getting out tomorrow, there will be long lines, we need you to get there three hours early. take your time, get there about three hours early. power outages, we were up to 300,000 in the melt rmetroplex. now down to 200,000. not all this spot. all this ice and snow goes up into ohio. it's just beginning to taper off now. another storm expected on sunday. deep freeze in december. back to you. >> incredible. here it feels almost like dallas at this time of year. jim cantore, thank you very much.
>> reporter: what's going on? >> crazy stuff. stuff that has retailers worried, by the way. we'll see if online commerce benefits again. in the meantime, even as temperatures getting colder outside, things are heating up the website. allen oning through it now for us. >> right now the big point of interest for our readers is the tale of stockton, california. they still have a problem. they're about to emerge out of bankruptcy but they're trying not to mess with their public pension funds. unlike detroit, which is messing with their public pension funds. so, this is sort of a test case of whether or not you can do it. public pension funding and the whole fight going on between municipalities and public service unions has been a big point of interest for our readers and we're seeing it today. still gobbling up about 100 readers a minute. next on the hot list, obama care one more time. dan who has been following it through the trials and travails, looking at bad storm.
data transfers at 10% rate, last report, plus low enrollment. only 25% of what they were expecting. perfect storm, boom, bad things. finally, our last on the "hot list," be if three, a lighter thing. they put 1,000 starbucks cards up for auction today. at 450 bucks apiece. went like that off gilt. boom, gone like that in seconds. >> what was the -- what was the -- why -- what was the premise? why were these being offered at half off or something? >> if you read the write-up -- no, it's $450 apiece. more of a prestige type of thing. they call them athlete shoppers going after these things. they were gone just like that. there was only 1,000 of them. i think starbucks sort of puts them out there to sort of up demand. anyway, our readers were incredibly interested in it. it's already logged 10,000 readers already. i expect it to go higher. >> have i to check it out now.
allen, thank you very much. i'll check the mailbox for a gift card as well. jumping the gun on fracing, new york energy company forced into bankruptcy either because of governmental bureaucracy or environmental safety. the problem is no one knows because a key government report is under wraps. new york city isn't talking but we'll talk to a lawyer representing the failed energy firm. before their gift helped preserve the point...
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welcome back. so making a big bet on fracking and losing but not for what you might think. new york governor has yet to release an environmental impact report on fracking, without the report, nors energy cannot go forward with its plans and that has driven the company into bankruptcy. my next guest an attorney representing nors energy says if the report isn't issued soon they will sue. we reached out to the commissioner of conservation for a statement. the department told us it does not comment on potential litigation, here to make his case, tom west, an attorney at the west firm. thanks for being here. >> hi, kelly. thanks for having me on the
show. >> we understand you are giving them two weeks to release this report. and you think this report actually will say it's okay to go ahead with fracking, but new york is suppressing it? >> that's correct, kelly. we are very certain, that the report will confirm fracking can be done safely, that's a conclusion reached every other place in the country. and around the world. new york has very rigorous standards, governor cuomo made this a political issue, there have been real consequences to companies like norse energy, landowners in the southern tier are going bankrupt. this process has been going on for 5 1/2 years, and it's time to bring an end to it. so we're going to give them two weeks to give us a definitive timeline. and without that, we will sue to compel a final decision. >> i mean, tom, it's possible this report comes out after all of that, it isn't necessarily a green light. >> we are confident it's a green light, we have heard from behind
the scenes it's a green light. we think it's all just politics for governor cuomo to maximize his opportunity for reelection, and that's both illegal and fundamentally unfair to companies like norse energy who have gone bankrupt, and landowners who cannot develop their mineral rights. the purpose of the lawsuit will be to have the courts require them to come forward, and issue final standards, if they come forward with more lame excuses, we're going to ask for a jury trial, we have a right to that, we will subpoena the commissioners, and let them show cause as to why they need more time. >> you know, what's interesting, tom, for a lot of people who sympathize with you and say there seems to be massive opportunity here, we can understand you want to go after it, you're frustrated you feel as though they are intentionally getting in the way. but why bet this company on a decision, before knowing if you'd actually be able to go forward with it? >> well, you know, that's not the case, kelly. norse energy was around long before new york shut its borders for oil and gas development, they were developing wells in
the state for many years. >> it's bankrupt now. >> and it's bankrupt, because new york's been shut down for 5 1/2 years. if you can't drill your assets for 5 1/2 years, you lose all your revenue opportunities, they lost the ability to raise capital, they lost the ability to sell their assets, they tried to auction them off as part of their reorganization proceeding, they got no responsible bidders for their assets, that's a direct result of the bankruptcy. you know, 5 1/2 years is too long. every other state that has addressed this issue has gotten it done in 12 months or less, ohio did it in nine months, they created comprehensive standards, never shut down the industry in the meantime. >> great point. fascinating case. we will stay tuned to see what happens. thanks for explaining to us what's happening upstate. tom west with norse. keep those tweets coming, we'll highlight the good, bad and ugly next, stay with us here for closing bell. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us.
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minister or a complete lunatic. that nicely sums up the reaction to the jobs report. john harwood an important issue, get why markets applaud but celebrating this likely budgets deal like celebrating 18 yard field goal. high school teams do that. it's an issue. we'll follow into the december 13th talks. tyler tweets millions to be made in these markets right now, wish i had about 50 k to get in on the action. is that tyler? >> i don't tweet. we know that. we had that discussion in the past. >> people tweet at you nevertheless. >> yes. >> they can't help themselves. j.j., a final thought on speaking of kind of recapping, we reclaimed these round numbers for the markets. we made it through the jobs report, is it smooth sailing? >> it's never smooth sailing. one thing i can guarantee to almost everyone, the markets will be volatile, no matter what happens. >> come on. >> where did you get that one? >> volatility is at an all time low. >> i think it was from your blog. but i think what investors need
to do, the regular guy on the street looking at his portfolio, think of beginning to sell the beloved and look at buying some of the loathed. >> or look at buying a ginger bread estate perhaps. this by the way is the gift for everyone who appeared on the show today. first of all, this is an actual williams sonoma ginger bread estate goes for $249, can you personalize it with your kid's name, we thought it would be nice to personalize -- we'll send you one of them. i don't know if you saw that. >> i hope so. i'm hungry. can i give one last thought? >> please do. >> with all the optimism in the markets, i feel someone has to throw rain on the parade. couple reasons why the numbers aren't too great. number one, nonfarm payrolls are growing much faster than employment, when measured by the household survey, i don't know why there's this divergence, if you want to worry, then you would think employment is the real story. maybe the fed looks at it and
thinks don't taper yet. >> the scrooge that stole christmas, he couldn't resist getting that in. >> thanks so much for being here. it was a pleasure. speaking of which, fast money coming up in just a couple seconds, melissa lee, you may be talking to john. >> to tell us whether deck taper is on the table. he wrote in the wall street journal, we'll get his full take and analysis tonight on fast. >> we'll see if he can tell us about christmas, past, present and future. >> thanks, kelly. fast money starts now. live from the nasdaq markets in new york city's times square, i'm melissa lee. here's the lineup. taper trades, great jobs report. huge reaction in the markets. so with taper clearly on the table, should you stick with what's working? or is it time to look somewhere new? rally rejects, not every stock getting a pop today. is it time to buy the momentum sitting out today's rally. watch out for cleon, one commodity to a six month high today. we have the trade comin